On the 1st January 2021, the agricultural transition period will start.
DEFRA have announced that the period from January 2021 to the end of 2027 will be known as the Agricultural Transition Period, where they will gradually reduce and then stop un-targeted direct payments. Between 2021 and 2024 Basic Payment Scheme payment will be gradually reduced down by 50%, meanwhile environmental payments will be being ramped up.
We are now seeing the biggest shake up in agricultural subsidies in over 50 years. Attached below is the government’s latest publication “The Path to Sustainable Farming” gives us an indication of the “early years” changes of how the direct payments (Basic Payment Scheme) will be reduced over the period from now up until 2028.
Many farmers and landowners are already aware that the phasing out of BPS payments is coming, with a new environmental reward based system known as ELMS (Environmental Land Management scheme) being introduced which will reward farmers for sustainable farming practices.
We are told that the larger the claim, the larger the percentage of cut made. I.e in 2021, claims of more than £30,000 will be reduced by 5%. And by 2024,, most ordinary claimants will have their claims dropped by 50%.
The money which is clawed back through cuts in the BPS payments, will be put into environmental schemes. Therefore, now really is the time when Farmers and Landowners should be looking at their farming practices and natural assets in order to maximise their subsidy claims via environmental options. DEFRA have reported that applicants may still apply for Countryside Stewardship in its current format up until 2023.
The real start of the new ELMS system will be 2024. This will be split into three tiers. The first, being known as “Sustainable Farming Incentive” with more straight forward farming options such aiding soil improvement, hedgerow management, pest management etc. The second, is named “Local Nature Recovery” and the third “Landscape Recovery” . The new scheme is not intended to displace farming, the options will be designed to work alongside farming practices. More details of these will be made available in the coming months. We will see a considerable pace of information coming through over the next few months as further consultations take place. between now and early 2021.
There has also been some light offered on de-linking payments and exit schemes, say for retiring farmers. Whereby some people will be given the option to take their remaining BPS payments in one lump sum, This will be offered in 2022, although we await to hear the terms of this option. After 2024, when BPS payments will have halved, payments will be de-linked from the land, and a single payment will be paid on an annual basis up until 2028. There will be no need for the claimant to be farming or even own land. Of course, by this point, the current cross compliance scheme regulations will not apply.
With the talk of de-linking payments and retiring farmers, we are also told there there will be some form of support to new entrants into farming, watch this space!
As you now see, agriculture is going through a process of significant economic change. All farmers and landowners should be considering what opportunities these changes bring to alter their business. Farmers need to be looking at their assets, their current farming issues and working through ways and options to improve and maximise on new opportunities.
Our rural team at John Earle are here now more than ever to assist both existing and new farming clients. We are here to help you to understand these changes and what is being asked of you, including looking at what options are right for your farming business, so that you are able to make an informed decision on the new systems.
We know that times are strange at the moment, and therefore we are delighted to offer an initial on-farm consultation at no cost to you, to explore ways in which you could alter your farming business to work with the new systems.
Get in touch with Amelia Sheldon, on amelia.s@johnearle.co.uk for more information.
For more information see this link to the recently published government document: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/939925/agricultural-transition-plan.pdf
By Amelia Sheldon AssocRICS